Baltimore Makes the Suburbs Richer

MARK K. JOSEPH

October 13, 1991|By MARK K. JOSEPH

If it's true that every time the state of Maryland sneezes the city of Baltimore catches a cold, then the impact of the state's current budget predicament must translate for the city as a full-blown case of double pneumonia.

Stripped of alternatives, Gov. William Donald Schaefer was forced to cut $21 million in direct aid to Baltimore as part of his budget-balancing plan. As painful as those direct cuts are, they pale in comparison to the impact of the cuts in human services that strike inordinately at citizens of Baltimore. Nevertheless, attention focused on the 83 State Police officers who were facing layoffs rather than on the tens of thousands of citizens in the city and elsewhere who face the loss of assistance essential to their continued existence.

It's as if the state were saying, "Sorry, but we just can't afford to help you any longer."

True, Baltimore faces the kind of challenges that lead many critics to question whether it makes sense for the state to invest so heavily in it. In concentrating on the many real problems facing Baltimore, however, we have lost sight of what the city really means to this region and the state of Maryland.

New research developed for the Abell Foundation paints a starkly different portrait of Baltimore, a picture of surprising strength rather than depressing weakness. It portrays the critical interdependence between the city and the region, where the success of one depends heavily upon the success of the other. It shows that Baltimore is the economic and employment engine that drives the region's economy.

Despite the tremendous job growth in the surrounding suburbs in recent years, Baltimore remains the region's employment center. It provides more than 40 percent of the region's private sector jobs and has the highest concentration of private sector employment in Maryland. There are 100,000 more jobs in Baltimore City than in neighboring Baltimore County.

What's more, county residents hold many of those jobs in the city. More than half of Baltimore County residents who have jobs work in Baltimore City. Even as far away as Harford County, nearly a quarter of the workers commute to city jobs. Overall, nearly 200,000 suburban workers commute to city jobs every day.

And, those commuters hold many of the best jobs, accounting for nearly 6 of 10 managerial and professional jobs and more than half of the better paying jobs in the technical and sales areas. Given that, perhaps it's not too surprising that the average commuter earns higher wages than does the typical city resident. But what is surprising are the significantly higher salaries earned by Baltimore commuters compared to their county neighbors who don't commute.

Further, average weekly wages are growing faster in the city than in the rest of the region. Between 1980 and 1989, wages grew 70.5 percent in the city but only 61 percent in the rest of the region. In other words, the best-paying jobs are in Baltimore and those city jobs, relative to jobs in the counties, are getting better.

But, a vibrant economy does not translate into fiscal health for the city. Because income is taxed according to where one lives, more than $4 billion of the income earned in the city is taxed elsewhere. If the city somehow were permitted to tax that income base that it now exports to the counties, it's estimated it could raise an additional $112 million a year.

Instead, those dollars flow to the neighboring counties: $59 million to Baltimore County, nearly $21 million to Anne Arundel County, $14 million to Harford County, $7 million each to Carroll County and Howard County.

Those imported revenues permit the counties to have lower property tax rates. Baltimore County would have to raise its property tax rate 59 cents without the income taxes paid by county residents who commute to jobs in the city. Other counties also are able to lower their property tax rates from the income tax windfall from their city commuters, ranging from 18 cents in Howard County to 70 cents in Harford County.

If the city retained that tax base, it could trim $1.75 from its bloated property tax rate.

The point of all this is not to suggest that those revenues should be taken away from the counties. Rather, it reflects the fact that the city is a tremendous generator of wealth that, because of the way taxes are imposed, it is largely unable to tap.

This new portrait of the city as a surprisingly vibrant economic engine should guide policy-makers in Annapolis as they seek solutions to the burgeoning financial challenges confronting state and local government. Contrary to the typical picture of the city as bastion to the state's most intractable problems, this picture shows just how dependent the rest of the region and state is on the city's continued economic health.